Have you seen the recent article whereby the son of late OG department store founder Mr Tay Tee Peng lost a $27.9 million (S$29.6 million) tax fight in an Australian court, which ruled the amount was to be paid for 33 million shares in real estate company Memocorp Australia which he acquired from his father’s estate?
According to Straits times, the son, Mr Tay Chwan Yi, argued that the shares were acquired based on a 2002 will made by his father, who died on Nov 30, 2013, aged 92, and that the shares were therefore exempted from the tax.
But the Australian tax commissioner disagreed, saying that Mr Tay Chwan Yi’s interest was not acquired “solely” because of the distribution of the estate.
The tax commissioner further mentioned that the transfer was made following a 2014 agreement between him and three siblings, and not due to their father’s will.
In judgment grounds issued last week, NSW Supreme Court Justice Richard White agreed with the taxman, after hearings last year.
Background Of Late Mr Tay Tee Peng
Mr Tay Tee Peng, who lived in Singapore, left an estate worth more than $1.7 billion in all, including his shares in companies.
He opened the first OG store in Chinatown in 1971. He also founded Ocean Garments that made and sold women’s fashion items at department stores in Singapore.
He also owned shares in several organisations in Australia, Hong Kong, China and Singapore, and held a 51 per cent stake in OG.
After provisions for his two daughters and Nanyang Technological University, the remains of Mr Tay Tee Peng’s estate were to be shared among his four remaining kids.
Mr Tay Chwan Shih, the eldest child, was to receive 31 per cent of the balance, Mr Tay Chwan Yi was to get 29 per cent and two other daughters, 20 per cent each.
Agreement Between The Siblings
However, these four siblings wanted to protect their father’s legacy by retaining ownership of his companies, instead of selling them.
So they entered into a formal agreement in February 2014, which Mr Tay Chwan Yi would get all of his father’s shares in Memocorp. The son would, among other things, buy out the shares in Memocorp from his three siblings.
In return, Mr Tay Chwan Yi would sell all his existing shares in OG to his elder brother and his shares in a China-based fashion company to one sister.
These shares are subject to the landholder tax in New South Wales (NSW), a duty paid when acquiring a substantial stake in a landholder.
A unit trust scheme, a private company, or a listed company that has land holdings in NSW with a value of at least A$2 million will be considered a landholder.